13 December 2010 00:00 [Source: ICB]
In this year of recovery, the ICIS Top 40 Power Players shine brightly. But they have earned their accolades through dark times
Gareth JJ Burgess
Gareth JJ Burgess
It's not the reveling in success that makes a true leader - rather it is how they deal with adversity. One could not ask for a better time to test their mettle than in 2008-2009, when the world was falling apart. Uncertainty reigned with the financial markets in chaos and volumes suffering unprecedented declines.
But through the dark days, a number of leaders took the steps necessary to make their companies more competitive in tougher times, while not sacrificing growth, continuing to make investments in research and development, and in capital-intensive projects.
Today, these people have led their companies out of the woods, and are again looking for growth - both organically and through acquisitions.
We are pleased to unveil the ICIS Top 40 Power Players, featuring the most influential people in the chemical industry. It has increasingly become a global list, as power shifts quickly across geographic regions.
This decade has seen the rise of the Middle East and China as major chemical production centers, and China as a powerhouse of consumption. Certainly the next decade will hold many new surprises as the balance of power fluctuates again. Look for Latin America to emerge as a key production area, as players seek to better utilize growing oil and gas reserves.
1. Andrew Liveris
Chairman, president and CEO, Dow Chemical
LIVERIS - AUSSIE FOR "COMEBACK"
Call it the comeback of the ages. The Australian-born leader of the world's second-largest chemical company, with around $45bn (€34bn) in sales in 2009, has brought it back from the brink of financial disaster in early 2009 to a position of great strength in 2010.
In April 2009, US-based Dow Chemical had just completed its $15.4bn acquisition of US specialty chemical giant Rohm and Haas after unsuccessfully negotiating to reduce the price. Dow agreed to buy the company at a huge premium at the peak of the market in July 2008, and closed the deal at the very bottom.
Making the situation worse, Dow's signed K-Dow joint venture with Kuwait's Petrochemical Industries Co. (PIC), which would have brought in $9bn in cash to help fund the Rohm and Haas deal, went belly up as PIC pulled out of the deal in December 2008.
Dow's balance sheet was crippled with around $22bn in long-term debt and $4bn in newly issued preferred stock. Its common stock price plunged to a closing low of $6.33/share in March in anticipation of the dire circumstances.
But Dow chairman, president and CEO Andrew Liveris swung into action, taking bold steps that have now led to a huge turnaround. He sold off billions of dollars in assets, slashed operating costs and paid down large chunks of debt. Financial results have improved significantly, capped off by a third quarter (Q3) where underlying profits almost doubled year on year to $705m on 23% higher comparable sales of $12.9bn.
Dow's $26bn debt load (including preferred stock) in 2009 has shrunk considerably to a more manageable $18bn.
AMBITIOUS GROWTH TARGETS
Now Liveris is aiming high, targeting earnings per share (EPS) of $3.50-$5.50 in the near term - far above Wall Street consensus estimates of $1.84 for 2010 and $2.43 for 2011.
Dow has increased earnings before interest, tax, depreciation and amortization (EBITDA) from $5.5bn in 2009 to a run rate of $8bn through Q3 2010. Liveris aims to bring this up to $10bn in the short term, and maintains that long-term earnings power is $15bn in EBITDA.
"We are in growth-and-execution mode. Our enhanced operating earnings, along with our lower cost structure, will enable us to continue to preferentially invest in our advanced materials, performance and agricultural businesses, as well as in our specialty plastics franchise, to generate strong cash flows, further strengthen our balance sheet and remunerate our shareholders," said Liveris at Dow's Investor Day in November.
"This is the new Dow - a high-growth company that has all the right elements in place right now," he added.
NEW PLASTICS STRATEGY
Dow's plastics business is firing on all cylinders, and Liveris unveiled a new strategy based on a major shift in fundamentals.
Instead of an outright sale or joint venturing of its plastics business, Dow will seek select divestitures in commodity plastics - most likely in high density polyethylene (HDPE) and polypropylene (PP) - in the next year or two. It will retain its low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) assets.
Dow's plastics business is benefiting from the US shale gas revolution, which has changed the game for local producers, with abundant supplies of natural gas feedstock fueling a sustainable competitive advantage. Dow plans to boost its ethane cracking capability on the Gulf Coast by 30% over the next three years.
ADVANCED ACTION PLAN
The Dow CEO has also taken the lead on formulating a plan to rejuvenate US manufacturing. His Advanced Manufacturing Plan, which was unveiled in June, calls for new and modernized infrastructure, investment in research and development (R&D), funding for education, a pro-trade policy, an alternative-energy strategy, "smart" regulatory reform, lower taxes and higher R&D credits, and tort reform to control spiraling legal costs.
Liveris has also gained clout in the international community. He was elected president of the International Council of Chemical Associations (ICCA) in October, and will oversee the International Year of Chemistry in 2011, which will highlight chemistry's benefits to society. He will seek to expand the Responsible Care environmental, health and safety initiative, and the product stewardship program Global Product Strategy internationally, including in China, India and Africa.
2. Peter Bahnsuk Kim
CEO, LG Chem
It has been LG Chem's ability not only to tap into the electronics and battery storage markets, but also to exploit the growth in demand for basic chemicals in China that has caught our eye. Reorganization over the past few years and the consolidation of subsidiaries has produced a more streamlined corporate structure, and the company bucked the global trend by delivering strong financial results in 2009 amid the worst of economic and industry downturns. It was worthy winner of the most recent ICIS Chemical Company of the Year Award.
"This award marks a symbolic achievement for LG Chem. LG Chem's significant outperformance results from its tireless efforts to create innovation and introduce a new culture of change to the organization, while improving global competitiveness as well," he said.
Kim has come up through the polyethylene (PE) business, through LG Petrochemical and Daesan Petrochemical, to head LG Chem as vice-chairman and CEO, a position he has held since 2008.
LG Chem is on a roll financially, but Kim says the business environment in which it operates is complicated by the uncertain economic outlook, by the rise of China and the Middle East and other emerging markets, and by increasingly strict environmental laws and regulation.
Kim is helping to build on a "speed management" approach at LG Chem which has sought to focus the company on achieving results more quickly than its competitors.
But he needs to keep up the pace. LG Chem is well liked by financial analysts, who forecast strong future earnings. The company is making big strides in batteries and electronics, and is the largest polyvinyl chloride (PVC) and acrylonitrile-butadiene-styrene (ABS) player in China. Being close to China's rapidly developing automotive industry is a position LG Chem can nurture, and one that is to be relished.
3. Mohamed Al-Mady
Mohamed Al-Mady, CEO of SABIC, faces major challenges because of a transformed feedstock cost and supply environment in the Middle East. All eyes will be on his efforts to move the company downstream.
The well-documented shortage of ethane means further ethylene derivative commodity expansions by SABIC will be few and far between. Even if ethane supply was still plentiful, it is likely that SABIC would still be required to crack propane, butane, naphtha and other heavier feeds instead, as it produces a broader range of derivatives. It plans to use this wider product slate to build manufacturing industries.
Al-Mady is renewing his focus on "value-added" derivatives such as polycarbonate (PC) and ethanol amines. He also plans to move into production of polyurethanes to boost the company's performance business. "Polyurethane is important for SABIC and we will implement plans in the near future," he said.
A value-added focus also means a new approach to sales and marketing. Off-take deals with traders will not work with such products, because it is all about developing a closer understanding of markets and meeting customers' application-development requirements.
A further challenge in the coming years is how SABIC can maintain market share and economies of scale in commodities as other producers' capacities get bigger. Some chemical analysts now describe the US as the new advantaged feedstock region, thanks to abundant reserves of shale gas. What might this mean for SABIC's overseas strategy?
4. Yoshimitsu Kobayashi
President, Mitsubishi Chemical Holdings
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In the future, Mitsubishi Chemical plans to focus on a few promising businesses, such as materials for flat panel displays and lithium ion batteries. Kobayashi is also taking the company down the green road, with investments being made in a pilot plant for bio-engineering plastics, and a commercial plant for biodegradable polyester.
5. Kurt Bock
Chief financial officer Bock will take the helm at German major BASF next May, succeeding Jurgen Hambrecht on his retirement as chairman and CEO. The new company head will take control soon after acquiring Cognis for €3.1bn ($3.83bn) - its largest takeover since it bought specialty chemical major Ciba last year - and cementing its position as the world's largest chemical firm. The business is being integrated into BASF's performance products segment. Solid financial results in the third quarter of 2010 were particularly impressive, given the global economic climate. Its net profit jumped more than fivefold year on year to €1.25bn on the back of a 23% surge in sales to €15.8bn. Operating profit for the quarter soared to €2.16bn from €971m in the same period last year.
6. James Gallogly
CEO, LyondellBassell Industries
Gallogly joined Netherlands-headquartered LyondellBasell Industries in May 2009, just months after the company filed for bankruptcy protection. It has since emerged from the biggest chemical bankruptcy in history to become one of the largest chemical companies listed on the New York Stock Exchange, with a market capitalization exceeding $17bn (€13bn). Profits have surged in 2010, capped off by a stellar third quarter that generated $1.23bn in earnings before interest, tax, depreciation and amortization (EBITDA) - up 53% year on year. The company is also paying down substantial debt, and could have a zero net debt position by 2011. In the longer term, LyondellBasell is well positioned to prosper from trends favoring olefins and polyolefins. It is enjoying higher margins from the ethane feedstock advantage in the
7. Mukesh Ambani
Chairman and managing director, Reliance Industries
Ambani is charting a new growth path for
Work is under way to add volumes in polyester and purified terephthalic acid (PTA) which would cement the company's global leadership in these products. It has announced a joint venture with
Ambani is also venturing into new businesses such as shale gas, with Reliance acquiring stakes in three ventures in the
8. Jim Ratcliffe
INEOS, ranked 10th in The ICIS Top 100 Chemical Companies this year, continues to make news under the leadership of owner and chairman Jim Ratcliffe. He had to battle hard to refinance the UK-based petrochemical and polymers company in 2009 because of the demand slump in late 2008, but succeeded in negotiating with lenders to push out debt maturities. With several divestments this year, the company's financial status is back to a position of strength. INEOS recently moved for full ownership of styrenics joint venture INEOS NOVA and in November agreed to combine its styrenics assets with those of BASF to form a JV called Styrolution. In 2010, Ratcliffe moved the company's headquarters to
9. Abdullah Bin Al-Attiyah
Chairman and managing director,
As head of Qatar Petroleum (QP), Al-Attiyah has led the Middle East major in many negotiations over the past year, including the creation of a petrochemicals joint venture with Shell in
10. Stephen Pryor
President, ExxonMobil Chemical
In the past year,
11. Mohamed Hassan Marican
PETRONAS Chemicals has been spun off and has undergone an initial public offering (IPO) that has raised $4.1bn. As overall CEO of PETRONAS, Marican must manage its transition from a big consolidated company with oil, gas and petrochemicals under one portfolio to one that is partly split, and needs to satisfy a new appetite for growth. Methane gas is said to be available for an ammonia and urea expansion in eastern
12. Ellen Kullman
Chair and CEO, DuPont
Taking the reins of US-based chemical major DuPont in January 2009 during a tumultuous economic period, Kullman implemented the cost cuts and productivity enhancements needed to bring DuPont out of the crisis a much stronger and nimbler company. She has simplified management structures and reduced the number of business units to take complexity out of the system. As the global economy has recovered, DuPont found itself with tremendous operating leverage, posting substantial profit gains in 2010 that have exceeded Wall Street estimates, despite diminishing revenues from pharmaceutical royalties that are set to expire. The company also raised full-year guidance. Kullman has maintained one of the best balance sheets in the industry, positioning DuPont to take advantage of growth opportunities in the future.
13. Jose Sergio Gabrielli
President and CEO, Petrobras
Gabrielli has led Petrobras since 2005, during which time the Brazilian state-owned energy group made the biggest oil find in the
14. Carlos Fadigas
Fadigas will replace Bernardo Gradin as CEO of Brazilian chemical major Braskem early in 2011. He is currently CEO of Braskem
15. Su Shulin
Sinopec has the opportunity to cash in on China's huge coal reserves and perhaps, in the long run, it could become the Asian equivalent of SABIC - a low-cost commodity petrochemicals producer - as long as the logistics and capital cost challenges of coal-to-chemicals projects can be tackled. But for Sinopec chairman Su Shulin, it is not just about making money, but also fulfilling an important national agenda. For example, the refining and petrochemicals giant runs capacity hard, even in adverse market conditions, in order to provide reliable supplies of raw materials to
16. Dmitry Konov
Konov has put SIBUR - ranked No. 1 in ICIS' Top 10 Central and Eastern European and Russian regional listing - into expansion mode organically and through acquisition. The company is seeking 20% growth in
17. Axel Heitmann
Under Heitmann's leadership, the Germany-based synthetic rubber and specialty chemical company has grown through global investments. It recorded sales of €5.06bn ($6.77bn) in 2009 and is targeting underlying earnings before interest, tax, depreciation and amortization (EBITDA) of €900m for 2010 - double its earnings in 2009. It will roll out planned investments in the coming months in
18. Feike Sijbesma
Having achieved most of DSM's targets in its Vision 2010 five-year plan and completing its transformation into a life sciences and material sciences company, Sijbesma is now setting his sights on the next big leap through to 2015. As chairman of the Netherlands-based company known for its innovation, he is raising his target for sales from innovative products from the current 12% of total sales to 20% by 2015. He also aims to double annual sales to
19. Stephen Clark
20. John Zillmer
President and CEO, Univar
At the helm of the world's second-largest chemical distributor since October 2009, Zillmer has made a number of moves to grow the company - most recently by acquiring US-based international commodity chemical distributor and trader Basic Chemical Solutions, which recorded $889m (€668m) in 2009 sales. A key focus for mergers and acquisitions is emerging markets. Zillmer plans acquisitions in
21. James Rogers
President and CEO, Eastman Chemical
Having engineered a major turnaround at Eastman Chemical,
22. Chong Bum Shik
President and CEO, Honam Petrochemical
Honam Petrochemical aims to become one of
23. Abdulaziz Abdulla Alhajri
Borouge's CEO has overseen plans for two of the world's largest petrochemical projects in
24. Christian Jourquin
Under Jourquin's leadership, Belgium-based Solvay divested its pharmaceutical business and is sitting on around €5bn ($7bn) in cash, ready for acquisitions. It is also expanding polyvinyl chloride (PVC) capacity in
25. Hans Wijers
Chairman and CEO, Akzonobel
Completing the acquisition of
26. Stephanie Burns
Chairman and CEO, Dow Corning
Completing her seventh year in charge at innovation-focused Dow Corning, Burns has led the silicon technology specialist's drive into emerging markets, notably
27. Khalid Al-Falih
President and CEO
28. Graeme Burnett
Senior vice president Asia and
Burnett is pushing to increase Belgium-headquartered Total Petrochemicals' foothold in the
29. Patrick Thomas
CEO, Bayer Materialscience
Thomas has overseen a surge in sales for the German major. For 2010, sales were expected to reach about €10bn ($14bn), with earnings before interest, tax, depreciation and amortization (EBITDA) before special items in excess of €1.3bn - triple the previous year's earnings. With the business performing well, it looks likely to return to precrisis sales levels far earlier than the original 2012 targets. Asia, and particularly
30. Jeffrey Quinn
Chairman, president and CEO, Solutia
Quinn has led a remarkable turnaround at the US-based specialty chemical and materials company, taking it out of bankruptcy in 2008, divesting noncore assets such as nylon, and buying select growth businesses such as ethylene vinyl acetate (EVA)-based solar encapsulants. The company is a leader in advanced polyvinyl butyral (PVB) and EVA interlayers for automotive, building and solar applications. Quinn is seeking more acquisitions, potentially adding another leg to its business, and is also considering back-integrating into EVA production. Solutia achieved earnings before interest, tax, depreciation and amortization (EBITDA) margins of about 26% in the 12 months to September 2010, and plans to boost this to 30% in five years. Quinn is also targeting organic sales growth from about $1.9bn (€1.4bn) in 2010, to $3.5bn by 2015.
31. Klaus Engel
CEO, Evonik Industries
Elected president of the German Chemical Association (VCI) in September, Engel now heads
32. Giorgio Squinzi
In October, Giorgio Squinzi, president of the Italian chemical industry association, Federchimica, and chairman of construction chemicals producer MAPEI, succeeded Christian Jourquin, CEO of the Belgium-based producer Solvay, as president of Cefic,
33. John McGlade
Chairman, president and CEO, Air Products
McGlade is attempting to take over US-based industrial gases supplier Airgas in a hostile $5.5bn (€4.1bn) deal to become the leading industrial gases player in
34. Peter Huntsman
President and CEO, Huntsman
Peter Huntsman has put his company firmly back on the growth path, having repaid about $300m (€225m) in debt in 2010 and refinanced debt to push out maturities. It has also cut costs in its textile effects business. Huntsman aims to boost its exposure to emerging markets. Growth moves include potential expansion of its polyether amines capacity in
35. Geert Dancet
Executive director, European Chemicals Agency
Dancet endured a stressful year in 2010 compared with many other power players on our list. Since becoming the first executive director of the Helsinki, Finland-based European Chemicals Agency (ECHA) in January 2008, Dancet has faced the formidable task of managing and coordinating the tricky first-phase implementation of the Reach program and, ultimately, registering tens of thousands of chemicals before the deadline of November 30, 2010. His next challenge is to prepare ECHA for the 2013 Reach deadline for lower tonnages. In the future, when the industry looks back at how successful Reach has been, Dancet will be judged on the decisions he has made during his key time in charge.
36. Craig Morrison
Chairman and CEO, Momentive performance Materials
After serving as head of Hexion Specialty Chemicals since 2002, Morrison led the company's 2010 merger with Momentive Performance Materials. The two companies, both controlled by private equity firm Apollo Global Management, combined to create a $7.5bn (€5.6bn) producer of specialty chemicals and materials. That made Momentive, with 117 production facilities worldwide and more than 10,000 employees, the second-largest
37. Cal Dooley
President and CEO, American Chemistry Council
Dooley has rejuvenated the
38. Francois Vleugels
After steering Czech chemical group Unipetrol through a modernisation program, Vleugels has spent 2010 on his next challenge - rescuing the ailing Czech epoxy resin group '8">'Spolchemie from financial collapse. Spolchemie had expanded too quickly before the global financial crisis, leaving it short of working capital. He implemented a cost-cutting and efficiency program, as well as turning the company's assets over to creditors in return for debt restructuring. Spolchemie now has to meet an end-of-year deadline to refinance around €105m ($141m) of debt. In August, Vleugels unveiled plans to split its core businesses into several independent units, with the aim of attracting financial partners and divesting, or even closing down unprofitable divisions.
39. Nathan Ticatch
Ticatch cofounded US-based PetroLogistics in 2004 and now heads its operations and commercial activities. In October, PetroLogistics launched production at its 544,000 tonne/year propane dehydrogenation facility in
40. Chris Jahn
President, National Association of Chemical Distributors
Jahn, head of the largest chemical distribution organization in
ONES TO WATCH
Whether they're industry veterans coming back for another shot or newly appointed leaders, keep an eye on these players
Senior managing director, Blackstone Group
The mastermind behind the 2004 leveraged buyout (LBO) of Celanese in Germany and its subsequent initial public offering in the US in 2005, which netted billions of dollars in one of the most successful LBOs in history, is back with Blackstone's planned $387m (€284m) buyout of US nonwovens company Polymer Group, announced in October. He also took US-based Graham Packaging public in February 2010 after its buyout in 2008.
Chairman, president and CEO, Chemtura
Having taken US specialty chemical company Chemtura out of bankruptcy in November 2010, Rogerson leads a portfolio of seven businesses that will be "actively managed" in the long run. The former CEO of US specialty chemicals firm Hercules, who sold the company to US chemical company Ashland in 2008 right before the economic crisis hit, will seek to divest assets near the peak and build and acquire new businesses.
Senior adviser, New Mountain Capital
Most people would ride off into the sunset after engineering what could be the chemical deal of the century. But after selling US specialty chemical firm Rohm and Haas to US-based Dow Chemical for around $15bn (€13bn) in April 2009, during the worst economic crisis since the Great Depression, former Rohm and Haas CEO Raj Gupta is seeking new challenges. As senior adviser at private equity firm New Mountain Capital, he helped the company buy US specialty chemical firm Mallinckrodt Baker for $280m (€210m).
Director general, European Association of Chemical Distributors (FECC)
Jensen-Korte started her new role as director general of FECC on November 2. After nearly 15 years at Bayer she joined Cefic and became director in 2002, focusing on chemical legislation and chemical management issues. Since 2004, she has been a policy officer and head of sector with the European Commission Directorate General Enterprise and Industry.
Joris Coppye was appointed CEO of pan-European distributor of specialty chemicals Azelis in 2009. Coppye has driven a corporate restructuring program to improve operational performance in preparation for a potential future initial public offering in 2012. The company has set significant growth targets for the period 2009-2011 based on selected acquisitions, organic growth and the realization of internal synergies.
The BASF veteran who started his career with the company in 1987 has been tapped as CEO of Germany's Styrolution, which will include the combined styrenics businesses of BASF and UK-based INEOS. Gualdoni will lead the 50:50 joint venture - the world's largest styrenics company, with estimated sales of €5bn ($6.5bn) in 2010. He faces a considerable challenge in integrating the assets and formulating a strategy for growth.
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